The appointment of an arbitrator by an independent institution is valid under the Arbitration Act, distinguishing it from unilateral appointments by parties.

JUDGMENT

[OP(C) Nos.1034/2024 and 926/2024]

(Dated this the 2^nd day of April, 2025 )

O.P.(C.) No.1034 of 2024 is filed challenging Ext.P9 order in C.M.A. (Arb) No.94/2023 and O.P.(C) No.926 of 2024 is filed challenging Ext.P8 order in C.M.A.(Arb) No.95/2023 of the Principal District Judge, Kottayam. The petitioner in both the cases is a Non-Banking Financial Public Limited Company engaged in various financial activities, including hire-purchase transactions. Since, parties are one and the same in both the petitions, heard together and a common judgment is passed.

2. The facts of cases are as follows:

OP© No.926 of 2024 : The respondents sought a loan from the petitioner Company to purchase a 2018 VE CV Eicher vehicle, bearing registration number KL 05/AS 270. The Company granted a loan of ₹16,60,000 to the first respondent, under a loan agreement dated 17/01/2022. The 2^nd respondent acted as guarantor, vide a separate agreement. Subsequently, the vehicle was hypothecated to the Company, and a charge was registered in its favour. Further, the respondents defaulted the loan repayments and despite issuing notice, they failed to settle the dues. Thus, as per clause 22 of Ext. P1 agreement, the Company referred the dispute to the Madras Chamber of Commerce and Industries (MCCI), for the appointment of a sole arbitrator.

3. The MCCI, as per its rules, appointed an arbitrator, with due notice to the borrower and guarantor. Thereafter, the petitioner appeared before the arbitrator and filed Claim Petition, registered as Arbitration Case No. RM/MCCI/15/2023. An Interim Application was also filed as No. 46 of 2023, seeking an order to provide security of ₹16,34,473.23, by the respondents or, failing that, for the attachment of their properties through the Principal District Court, Kottayam.

4. The Tribunal, by Ext.P5 order dated 28/03/2023, directed the respondents to furnish security by 17/04/2023 and due to their non-compliance, the Tribunal, vide order dated 17/04/2023, requested the Principal District Court, Kottayam, to enforce the interim attachment of the respondents' immovable property under Section 17 of the Arbitration Act, read with Section 136 CPC, and to confirm the attachment. To enforce Ext P5, the petitioner filed Ext P6 application under (2) of the Act, before the Principal District Court, Kottayam, as C.M.A.(Arb) No. 95/2023, against which the first respondent filed objections challenging the validity of the arbitrator's appointment. The Principal District Judge, after considering the matter, dismissed Ext P6, by order dated 25/01/2024. Aggrieved by Exhibit P8, this original petition is filed.

5. O.P.© No.1034 of 2024 : The petitioner granted a loan of ₹20,40,000/- to the first respondent, under a loan agreement dated 17/01/2022, to purchase a 2018 VE CV Eicher vehicle bearing registration number KL 05/AT 6064. Further, the respondents defaulted the loan repayments and despite issuing notice, they failed to settle the dues. Thus, as per clause 22 of Ext P1, the Company referred the dispute to the Madras Chamber of Commerce and Industries (MCCI), for the appointment of a sole arbitrator.

6. The MCCI appointed an arbitrator, with due notice to the borrower and guarantor. Thereafter, the petitioner appeared before the arbitrator and filed its Claim Petition, as Arbitration Case No. RM/MCCI/677/2022. The petitioner also filed Interim Application No. 34 of 2023, seeking an order to provide security of ₹20,23,161/- by the respondents or, failing that, for the attachment of their properties through the Principal District Court, Kottayam.

7. The Tribunal, by order dated 13/02/2023, directed the respondents to furnish security by 06/03/2023, and due to their non-compliance, the Tribunal, vide order dated 06/03/2023, requested the Principal District Court, Kottayam, to enforce the interim attachment of the respondents' immovable property under Sec 17 of the Arbitration Act, r/w Section 136 CPC, and to confirm the attachment. To enforc